Ninth Circuit rules on Article III standing of absent class members who received unpublished inaccurate credit reports

In Ramirez v. TransUnion, LLC, a Ninth Circuit panel ruled 2-1 that absent class members in a Fair Credit Reporting Act ("FCRA") class action must establish Article III standing to recover monetary damages at the final judgment stage of the case.[1] The court declared that only class representatives must establish standing at earlier phases of the suit. The court also concluded that all 8,185 consumers who received the inaccurate reports at issue could obtain money damages, even though only 1,853 had their reports requested by a potential credit grantor during the class period. Thus, the court concluded, Sergio Ramirez and the entire class of consumers he represented sufficiently established that each class member had suffered—or was at an imminent risk of suffering—a cognizable injury under Article III of the Constitution, which requires that the plaintiff must have suffered a "concrete and particularized" injury-in-fact that is “actual or imminent."[2]

Factual background

When TransUnion—one of the nation's largest credit-reporting agencies—developed software that purported to match consumers' names to a Treasury Department list of suspected terrorists, consumers around the country soon found out that the system produced thousands of incorrect "terrorist alerts" on the front pages of their credit reports. In 2010, the Third Circuit slammed TransUnion and upheld a jury verdict against the company for some of the same incorrect reporting, concluding that it violated the FCRA.[3] In the years that followed, TransUnion apparently made few changes to its terrorist-alert practices.[4]

In February 2011, Sergio Ramirez went to a Nissan dealership to buy a car. Once the dealership obtained his TransUnion credit report, however, the salesman told Mr. Ramirez he could not buy the car because he was on the terrorist alert list. Mr. Ramirez's wife ended up purchasing the car in her name, but Mr. Ramirez "was embarrassed, shocked and scared" to learn that he had been incorrectly identified as a terrorist and cancelled a family international vacation he had planned.[5] After contacting TransUnion, he and the class members received incomplete and confusing information falsely suggesting that the terrorist alerts had been removed from the first page of their credit reports and withholding information about how to dispute the alerts.[6] In February 2012, Mr. Ramirez sued TransUnion on behalf of himself and 8,184 other consumers who had been incorrectly listed on terrorist alerts, alleging that TransUnion violated the FCRA by placing the incorrect alerts on their credit reports and later sending misleading and incomplete disclosures about the false alerts.[7] While a class of 8,185 consumers was certified, only 1,853 of the class members actually had their credit reports requested by potential lenders during the class period.[8] At the end of trial, the jury found in favor of the class on all 8,185 claims and awarded class members about $60 million in statutory and punitive damages.[9] TransUnion appealed to the Ninth Circuit.

The Ninth Circuit's decision

While the Ninth Circuit panel agreed with TransUnion that all class members must have standing at the final-judgment stage,[10] the panel majority held that all 8,185 class members suffered cognizable injuries under Article III. The majority disagreed with TranUnion's argument that there was no evidence supporting damage to class members beyond the 1,853 class members whose credit reports were disclosed to a third party. Specifically, the majority ruled, "an injury may still be concrete even if intangible," and "there is sufficient injury in fact when a defendant's statutory violation created a ‘real risk of harm' to a plaintiff's concrete interest."[11] Applying the test the Ninth Circuit had developed on remand from the Supreme Court's 2016 Spokeo decision,[12] the majority held that all class members, even absent class members, demonstrated Article III standing. Under the two-part inquiry adopted by the Ninth Circuit in the Spokeo remand, the panel majority held that (1) the statutory provisions of the FCRA protect concrete interests, and (2) the specific violations before it actually harmed or presented a material risk of harm to the entire class.[13] Because TransUnion "prepared the inaccurate reports and made them readily available to third parties,"[14] the majority concluded that TransUnion's failure to follow reasonable procedures to ensure maximum possible accuracy of its reports exposed all class members to a material risk of harm to their concrete interests.[15]

TransUnion also challenged the district court's class-certification decision, asserting that Mr. Ramirez's uniquely severe injuries were not typical of the class, as required by Rule 23.[16] Mr. Ramirez's alert said "that he was a match instead of a potential match, he was denied credit because of the alert, he cancelled a vacation because of the alert, and he spent significant time and energy trying to remove the alert, including hiring a lawyer."[17] But the majority said these differences did not defeat "typicality" because that inquiry focuses on the nature of the class representative's claim, not the specific facts from which it arose.[18] While acknowledging that the class representative's "personal narrative is somewhat more colorful" than other class members, the court concluded that his claims were based on the same legal theory and arose from the same event, practice, or conduct that gave rise to the claims of other class members. The other class members need only "fall within the common contours of the class-wide theory of liability."[19]

The Ninth Circuit agreed with Mr. Ramirez and the class that TransUnion acted willfully on each of their claims. Under the class's "reasonable procedures" claim, the majority held that TransUnion had acted unreasonably because it continued to utilize name-only searches even though the Third Circuit had previously reprimanded it for failing to use more information to verify accuracy.[20] Under the class's "disclosure and summary-of-rights" claims, the majority concluded that these claims were "not mere procedural or technical requirements" but are there to "protect consumers' concrete interest in accessing important information about themselves and understanding how to dispute inaccurate information before it reaches potential creditors."[21] TransUnion willfully violated its disclosure and summary-of-rights duties when it left out the terrorist alerts from credit reports it sent to consumers, and did not send a summary of rights with each written disclosure, as required by FCRA.[22]

Despite the willfulness of TransUnion's conduct, the panel agreed that the punitive damages awarded by the jury were excessive, and the court reduced the ratio between the punitive and statutory awards to 4 to 1.[23]

Concurring in part and dissenting in part, Judge McKeown would have held that only the 1,853 class members whose inaccurate report was actually disclosed to a third party had standing. "The story of the absent class members," Judge McKeown lamented, "went largely untold" at trial.[24] While the "jury learned class members requested a credit report from TransUnion and were sent separate mailings," the "trial featured no evidence that absent class members received, opened, or read the mailings, nor that they were confused, distressed, or relied on the information in any way."[25] This lack of evidence of harm to other members of the class was "a deficiency that cannot be cured by speculation," Judge McKeown concluded.[26] Because she was not convinced that the evidence in the record established a serious likelihood of disclosure, Judge McKeown would have found that the non-disclosure plaintiffs lacked standing.[27] She also noted that a class should not have been certified because the only class representative, Mr. Ramirez, was injured by "unique" and "stark atypicality."[28]

The implications of Ramirez for class-action litigation in the Ninth Circuit

Although Ramirez marks the first time that the Ninth Circuit has held directly that the Article III standing of absent class members must be determined at the final-judgment phase of a money damages class action, the court did not erect any new barriers to class-action litigants. Rather than breaking new ground, the Ninth Circuit largely reaffirmed the contours of class-action standing doctrine within the circuit.

First, the court reiterated that Article III standing for absent class members need not be established at the motion-to-dismiss or class-certification phases.[29] The panel noted explicitly that the Ninth Circuit "has previously held that only the representative plaintiff need allege standing at the motion to dismiss and class certification stages," and that its holding in Ramirez does not "alter the showing required at the class certification stage or other early stages of a case."[30] Thus, the decision does not cast a shadow into earlier phases of class-action litigation.  

Second, the court held that standing can be established for absent class members through common evidence of classwide injury. Both the panel decision and the dissent were in accord that evidence of standing at the final judgment stage need not be individualized for each absent class member. "Without a doubt," Judge McKeown wrote in her partial dissent, the Article III standing of absent class members can be established through classwide methods such as "expert testimony, representative class members, and credit agency protocol[s]," and individual evidence need not "be proffered as to each class member."[31] The panel decision, likewise, ruled that classwide evidence of the availability and sensitivity of the terrorist alerts was "sufficient to show a material risk of harm to the concrete interests of all class members."[32] Requiring "further individualized evidence," the majority noted, "would defeat the purpose of class actions."[33]

Although Ramirez breaks little new ground, the decision provides some useful lessons for class-action litigants, particularly within the Ninth Circuit. First, courts and litigants at the class-certification stage should "keep in mind," as the Ninth Circuit admonished in Ramirez, that "they will need a mechanism for identifying class members who lack standing at the damages phase."[34] Likewise, as Judge McKeown warned in her partial dissent, the evidence presented at trial must do more than present a compelling narrative about the class representatives alone.[35] Rather, class-action plaintiffs must put forth evidence at trial that the absent class members meet the requirements of Article III standing.

TransUnion has indicated that it intends to seek certiorari of the decision before the Supreme Court in the coming weeks. It remains to be seen, however, whether the Court will welcome TransUnion's invitation to wade back into the FCRA standing issues that divided the Court in Spokeo.


[1] Ramirez v. TransUnion, LLC, 951 F.3d 1008 (9th Cir. 2020).

[2] Lujan v. Defs. of Wildlife, 504 U.S. 555, 560-61 (1992).

[3] See Cortez v. Trans Union, LLC, 617 F.3d 688, 696-706 (3d. Cir 2010).

[4] Ramirez, 951 F.3d at 1021.

[5] Id. at 1017-18.

[6] Id. at 1018-19.

[7] Id. at 1022.

[8] Id.

[9] Id.

[10] The Ninth Circuit panel agreed that a contrary result would violate the Rules Enabling Act by transforming class actions into a vehicle for individuals to obtain money judgments in federal court even though they could not show sufficient injury to recover those judgments individually. Id. at 1023-24.

[11] Id. at 1024 (quoting Spokeo, Inc. v. Robins, 136 S. Ct. 1540, 1549 (2016)).

[12] Spokeo, Inc. v. Robins, 867 F.3d 1108 (9th Cir. 2017) (Spokeo IIIâ€).

[13] Ramirez, 951 F.3d. at 1025.

[14] Id. at 1028.

[15] Id. at 1025, relying on the requirements of Section 1681e(b) of FCRA.

[16] Id. at 1033.

[17] Id.

[18] Id.

[19] Id.

[20] Id. at 1031.

[21] Id. at 1029.

[22] Id. at 1032.

[23] Id. at 1037.

[24] Id. at 1039 (McKeown, J., dissenting in part and concurring in part).

[25] Id.

[26] Id. at 1038.

[27] Id. at 1039.

[28] Id. at 1038.

[29] Id. at 1023 (citing In re, Inc., 888 F.3d 1020, 1028 n.11 (9th Cir. 2018); Melendres v. Arpaio, 784 F.3d 1254, 1262 (9th Cir. 2015)).

[30] Id. at 1023 & n.6.

[31] Id. at 1040.

[32] Id. at 1027.

[33] Id. at 1030 n.10.

[34] Id. at 1023 n.6.

[35] Id. at 1041.

*Sean Zehmer is a Senior Staff Attorney and Ian Engdahl is an Associate in the Washington, DC office.

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